The Neurospora VS ribozyme differs from other small, naturally occurring ribozymes in that it recognizes for trans cleavage or ligation a substrate that consists largely of a stem-loop structure. We have previously found that, cleavage or ligation by the VS ribozyme requires substantial rearrangement of the secondary structure of stem-loop I, which contains the cleavage/ligation site. This rearrangement includes breaking the top base-pair of stem-loop I, allowing formation of a kissing interaction with loop V, and changing the partners of at least three other base-pairs within stem-loop I to adopt a conformation termed shifted. In the work presented, we have designed a binding assay and used mutational analysis to investigate the contribution of each of these structural changes to binding and ligation. We find that the loop I-V kissing interaction is necessary but not sufficient for binding and ligation. Constitutive opening of the top base-pair of stem-loop I has little, if any, effect on either activity. In contrast, the ability to adopt the shifted conformation of stem-loop I is a major determinant of binding: mutants that cannot adopt this conformation bind much more weakly than wild-type and mutants with a constitutively shifted stem-loop I bind much more strongly. These results implicate the adoption of the shifted structure of stem-loop I as an important process at the binding step in the VS ribozyme reaction pathway. Further investigation of features near the cleavage/ligation site revealed that sulphur substitution of the non-bridging phosphate oxygen atoms immediately downstream of the cleavage/ligation site, implicated in a putative metal ion binding site, significantly altered the cleavage/ligation equilibrium but did not perturb substrate binding significantly. This indicates that the substituted oxygen atoms, or an associated metal ion, affect a step that occurs after binding and that they influence the rates of cleavage and ligation differently. (C) 2002 Elsevier Science Ltd. All rights reserved.